Core sector growth slows to 3% in September as energy output weakens

Steel output expands faster

India's core sector growth eased to 3 percent in September 2025, down from 6.5 percent in August, as weak performance in refinery products, natural gas, and crude oil offset strong momentum in steel and cement, according to data from the Ministry of Commerce and Industry.

The eight core industries — coal, crude oil, natural gas, refinery products, fertilisers, steel, cement, and electricity — together account for 40 percent of the Index of Industrial Production (IIP).

Steel leads, energy drags

Steel output continued to anchor growth, rising 14.1 percent year-on-year after a 13.6 percent increase in August, supported by strong construction and infrastructure demand. Cement production also grew 5.3 percent, reflecting steady activity in the housing and real-estate sectors.

However, energy-linked industries remained a drag. Refinery output contracted 3.7 percent, while natural gas and crude oil production fell 3.8 percent and 1.3 percent, respectively — extending a string of monthly contractions in India’s hydrocarbon sector.

Coal production, which had surged 11.4 percent in August, slipped 1.2 percent in September, partly due to high base effects and seasonal monsoon disruptions.

Fertilisers, electricity see modest growth

Fertiliser output rose a modest 1.6 percent, aided by pre-rabi season stocking, while electricity generation increased 2.1 percent, slower than the 4.1 percent growth recorded in August.

Growth momentum softens

For the first half of FY26, core sector growth averaged 2.9 percent, down from 4.3 percent in the same period last year, signalling that while industrial momentum remains positive, the pace of expansion has softened amid global demand uncertainty and uneven recovery across sectors.